A compensation guarantee assures users of reimbursement for losses under specific conditions, typically following a security incident or operational failure. This provision aims to reduce user risk and build trust in digital asset services. The scope and funding of such guarantees vary considerably across platforms and jurisdictions.
Context
Compensation guarantees gain prominence in crypto news when platforms experience hacks or technical failures, prompting questions about user protection. The existence and specifics of these guarantees significantly influence user confidence and regulatory perceptions of a platform’s reliability. Scrutiny often focuses on the financial backing and terms of these assurances.
A critical hot wallet security lapse allowed unauthorized asset transfers, immediately compromising user funds and forcing a complete operational halt.
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